Yield-hungry funds continue to exit PH markets

Short-term portfolio funds, or “hot money,” continued to leave the country in February as investors sought better returns overseas in anticipation of higher interest rates in the world’s largest economy.

The Bangko Sentral ng Pilipinas (BSP) said fund managers of this “hot money” might have also been taking profits on their stock market holdings and repatriating the proceeds of these sales.

In a press statement, the central bank said $545 million in portfolio investments left the Philippine economy on a net basis in the second month of the year, reversing a net inflow position of $162.2 million in January 2018.

“This may be attributed to profit taking as well as investor reaction to news of possible rate increases by the US Federal Reserve due to an expected surge in inflation amid implementation of the US government’s tax cuts,” the BSP said.

Year-on-year, the figure was higher than the $409 million net outflow recorded for February 2017.

Registered foreign portfolio investments in February amounted to $1 billion, or 36.6 percent lower than the $1.6 billion recorded in January 2018. Year-on-year, however, inflows rose by 4.8 percent or $47 million from $981 million in February 2017.

About 81 percent of investments registered during the month were in PSE-listed securities pertaining mainly to holding firms, property companies, banks, food, beverage and tobacco firms, and casinos and gaming companies, while the 19-percent balance went to peso-denominated government securities.

The United Kingdom, the United States, Malaysia, Hong Kong, Luxembourg and Singapore were the top six investor countries for the month, with a combined 85.1-percent share of the total.

Outflows for the month of $1.6 billion reflected increases of 7.7 percent and 13.2 percent compared to the $1.5 billion recorded in the previous month and the $1.4 billion from a year ago, respectively. The US continued to be the main destination of outflows, receiving 73.8 percent of total remittances.